India’s higher education institutions are expected to record a revenue growth of 9-11 per cent in FY2026, maintaining a pace similar to FY2025, driven by expanding seat capacities, rising enrolments, and the introduction of new courses, according to a report by rating agency ICRA released on Tuesday.

The report highlights that tightening student visa regulations in countries like the US, UK, and Canada could boost demand for Indian higher education in the near to medium term. It also notes steady improvement in the credit profiles of institutions, particularly those focused on the medical stream.

With an estimated 15-20 per cent of India’s population falling within the 15-24 age group, coupled with rising literacy rates, demand for higher education is projected to grow significantly over the next decade. Although rising education costs pose challenges, improved access to education loans from financial institutions has supported students seeking higher education.

Government support has also played a crucial role, with expenditure on higher education doubling over the last decade. The number of universities has increased from 642 in academic year (AY) 2011 to approximately 1,189 in AY2025, contributing to substantial revenue growth for major institutions.

Healthy admissions and annual fee increases of 6-8 per cent have led to a strong compounded annual growth rate (CAGR) of 15 per cent in revenue for colleges between FY2020 and FY2024.

Suprio Banerjee, Vice President at ICRA, commented, “The higher education sector in India is poised for growth owing to continued strong demand, increasing disposable family income, easy access to credit, and enhanced Government focus and private sector participation, especially in the medical and engineering streams. However, the sector faces challenges such as fragmentation, infrastructure deficiencies, affordability issues, employability concerns, shortage of qualified faculty, and limited autonomy due to high regulations.”

The gross enrolment ratio (GER) in higher education has risen from 21 per cent in AY2012 to around 28 per cent in AY2022. The National Education Policy (NEP) 2020 aims to increase the GER to 50 per cent by 2035, indicating significant untapped potential for growth in the sector.

With inputs from agencies.